Rupert Murdoch’s News Corporation is the most powerful media group in the world. For more than a year, its British arm, News International, which publishes four newspapers in this country including the best-selling tabloid, The Sun, has been engulfed in a corruption scandal with revelations that have become more lurid by the day. The paper at the centre of the storm was the News of the World, a Sunday tabloid which like its sister daily The Sun, was famous for peddling sensationalism and salacious gossip. By July of last year irrefutable evidence of phone-hacking on an industrial scale by NofW journalists made earlier attempts to deny such practices impossible to sustain. The evidence pointed to criminality at editorial and management level at News International. Murdoch summarily shut the paper down. NI’s CEO and Murdoch favourite, Rebekah Brooks – a former editor of NofW - was forced to resign. Shortly afterwards she was arrested by the Metropolitan Police on suspicion of conspiring to conceal evidence of phone-hacking. Her close colleague, Andy Coulson, another former NofW editor and later director of communications for prime minister David Cameron, had earlier been arrested for the same reason. Both remain on police bail. Murdoch’s son James resigned last week as chairman of News International.
In recent weeks the story has become even more engrossing. Failure by the Met to properly investigate the original evidence of large-scale phone-hacking unearthed by investigative journalists at The Guardian newspaper, pointed to collusion by the police in the criminality at NI. The police were being paid for confidential information. The evidence pointing in this direction was so persuasive as to make plausible denial impossible. This was explosive stuff with the potential to seriously damage the government. Coulson had been appointed by Cameron as communications director for the Tory party and Brooks was a friend, neighbour and riding companion of the prime minister. Top level police officers were forced to resign over the scandal. Clearly, any new police investigation had to be conducted by people who were untarnished by association with Murdoch’s minions. Three such investigations, operations Weeting, Elveden and Tuleta are now under way into allegations of phone hacking, inappropriate payments to the police and computer hacking. They show every sign of being genuinely independent. Also, last July, an inquiry chaired by Lord Justice Leveson was established to investigate the culture, practice and ethics of the British press. The Leveson inquiry is also under way.
The corporate owners of most of the British press show distinct signs of unease at the proceedings of the police and Leveson inquiries. News International has no choice but to co-operate fully with the investigations and Murdoch felt obliged last year to establish through News Corp an independent Management and Standards Committee (MSC) which would supply the police with all the evidence in their possession. So far 300 million email messages have been handed over. However, Trevor Kavanagh, associate editor of The Sun, appeared incandescent with rage at the arrest in January of 5 (now 10 since November) of its journalists and executives on suspicion of bribery and phone-hacking. Laying claim to the moral high ground – a territory rather unfamiliar to The Sun – he sought to depict the journalists as martyrs in the cause of press freedom, persecuted for buying a policeman a drink. He railed against the MSC and News Corp, in effect accusing Murdoch of providing the noose to hang Britain’s best selling newspaper. But, in a brilliant piece of timing, the octogenarian tycoon turned up in London to announce that The Sun would also rise on Sunday. A “new” paper, bearing the same name as the daily, was launched with the same editor and some of the same staff. It replaces the lost and lamented News of the World. On its launch last Sunday sales were more than 3 million. But this has not turned News International’s winter of discontent into glorious summer nor is it likely to do so. At best it might have provided a brief break in the lowering clouds.
At the end of February developments at the Leveson inquiry took a dramatic turn. Since it started its deliberations a succession of witnesses have given damning testimony about their treatment at the hands of unscrupulous, intrusive reporters for whom ethical standards did not exist. For the first time a spotlight was shone on the grubby and amoral world of much that passes for journalism in the tabloid papers. But now, the self-serving, specious defense presented by people like Kavanagh was blown out of the water. Deputy Assistant Commissioner of the Metropolitan Police, Sue Akers, clearly angered by the suggestion that the arrests of Sun journalists had been unnecessary and vindictive as they had supposedly done little or nothing wrong, quietly but decisively demolished their defense. Referring to the millions of emails her team is examining, she said that at the beginning of the investigation it was already clear that these were not cases of Sun reporters buying public officials the “odd drink or meal”, but the payment of “regular, frequent and sometimes significant sums of money.” There was a “culture of illegal payments at The Sun at senior level.” The police were now investigating “a network of corrupt officials” in many walks of public life. Such payments were made, not for important information that, it could be argued, was in the public interest, but for stories that amounted to no more than “salacious gossip”. Furthermore, such payments, obviously authorized at management, level were known to be illegal because an internal payment system was used in order to hide the identity of the recipients.
Of great significance is the information contained in Akers’s testimony about an internal NI email clearly indicating that Andy Coulson and Rebekah Brooks, both former editors of the News of the World, knew about the extent of phone-hacking at the paper in 2006, though both have stated publicly since then that they had no such knowledge at the time.
These are still early days and so far we have seen only the tip of the iceberg. It might be thought that Murdoch’s media empire is sinking in a swamp of corruption. Last year, before this scandal broke, his seemingly unstoppable bid to take full control of BSkyB, was almost certain to have been waved through by culture secretary Jeremy Hunt. But it was stopped dead in its tracks through a rare parliamentary cross-party unity opposed to the bid. Now, in view of the damning evidence against NofW , the Tories, who had been happy to appease Murdoch, could no longer regard him as a “fit and proper” person to be granted even more power over the British media than he already possessed. This was a serious set-back for the tycoon. However, it would be naïve to imagine that a global enterprise such as New Corp is likely to be brought down by the hacking and bribery scandal, however sensational it may seem in Britain. Reference is frequently made to the global reach of Murdoch’s media empire, but the details seldom receive much attention. It is worth considering them.
The revenue from newspapers accounts for only $6.1bn (18.6%) of News Corp’s $32.7 billion global revenue. Nevertheless, Murdoch owns 150 national and local papers in the country of his birth, Australia. Among his US and Canadian titles are The Wall Street Journal and the New York Post. His European titles (mainly in the UK) amount to $1.6bn, merely 4.9% of the global revenue. Harper Collins publishing is worth $1.3bn.
News Corp’s largest source of revenue lies in film and electronic media, with the biggest concentration in the United States. Filmed entertainment, with 10 companies including 20th Century Fox, and Fox 2000 Pictures accounts for $7.6bn. Cable networks include the Fox news channel, the Fox Business Network, 8 Fox network channels and 19 international channels, bringing another $7bn in revenue. A further $4.2bn comes from other Fox TV outlets in the U.S. such as the Fox Broadcasting Company, My network TV and Fox Sports.com. There are another 27 Fox stations.
Then there is a further $3.8bn from Satellite TV, including Sky Italia, Sky Deutschland (45%), BSkyB (39%), Tata Sky (20%) and Foxtel (25%). The New Digital Media group accounts for another $2.7bn.
It is sometimes claimed that Rupert Murdoch has a sentimental attachment to newsprint dating from his first business ventures. His surprise launch of the Sun on Sunday is seen as evidence that he will not abandon Wapping, the home of News International. But when it comes to protecting his global interests, Murdoch is a hard-headed business man, not a sentimentalist. Less than 5% of News Corp’s global revenue comes from his British newspapers. For many years his malign influence has corrupted successive governments in this country and dragged the standards of an already prostituted tabloid journalism from the gutter to the sewer. His influence over the political establishment has evaporated. No-one with any sense will dare to be associated with him, despite the fact that the ineffable education secretary, Michael Gove, apparently remains infatuated.
There is a respect in which Murdoch and others like him who seek “to bestride the narrow world” like colossi, resemble the fascist dictators of the 20th century. They seek to dominate all who oppose them and to extend their empires as far as they can. They cannot accept defeat. Murdoch knows now that the ongoing investigations by the Metropolitan police and the Leveson inquiry will throw up ever more damning evidence of criminality by journalists and senior staff at News International. He has not attempted to deny that such criminality was practiced at the News of the World and The Sun. In saying, as he has, that such practices belong to the past, he admits that they occurred. His concern now must be that News Corp may face prosecution in the United States under the Foreign Corrupt Practices Act. Should this happen the company, if found guilty, would face hundreds of millions in fines. The longer he continues to publish the tabloid titles that are under investigation, the more difficult it will be for him to extricate the parent company, News Corp, from the consequences of their criminality.
If he decides that it is in his best interests to jettison the 4.9% of News Corp’s revenue to protect the 95.1% of his global empire, he will either sell off or close down his U.K newspapers. It could well come to that sooner than many may imagine.